Of late, a category of insurance referred to as usage-based insurance (“UBI”) has been gaining popularity as a method for insurance companies to more fairly allocate risk among their customers. The principals of UBI suggest an individual will share all vehicle usage or exposure data without regard to privacy, such as location, miles driven by time of day, time of day, and speeding/braking data all collected from their vehicle using an onboard device, or a combination of an onboard device and portable transmitter (i.e., telemetry device) directly or indirectly controlled by the insurance carrier. The methods of retrieving data from these sensors for use in the underwriting and modeling of rates do not discriminate among those driving the vehicle by either percentage of time or variation in driving scores. Furthermore, little effort is made to provide contextually relevant data and information back to the user to improve driving behavior in real-time.
The marriage of onboard vehicle performance data with off board environmental data, replete with GPS satellite-based determinations of vehicles dynamics, has been shown to have a significant impact on determination of the frequency of collisions and near-collisions. To date these contextual computations have been performed off-board and delivered to the insurance carriers as a proxy for collisions. Insurance carriers are growing increasingly concerned about creating these analytics off-board because of three trends (1) location privacy protection for the insured, (2) an inability to directly measure and index improvements safety systems on the vehicles are creating, resulting in more and more near-collisions as demonstrated by the continued decline in highway fatalities, and (3) the quantity of data demands more distributed computing. These factors have created a paradigm shift in risk management to improve both the individual driver's ability to receive, and the insurance carrier's ability to offer, loss prevention services. The growing consensus among safety managers has been that analyzing the data from historical driving behavior—or even current driving behavior—has limited value unless one has a simultaneous (i.e., synchronous) data set from other drivers sharing the road in a common driving environment. Developing a portable safe-driving score as an input to a risk-transfer method, or risk-management device, without the ability to measure the driver and vehicle response to the forward assessment of risk (such as a warning to slow down because the vehicle is about to cross a bridge with known icing conditions) has been demonstrated to not correlate with negative outcomes (i.e., actual loss experience).
Several embodiments of scoring methods have been documented in the related patents directed to UBI. Each such method results in a determination of risk based on granular driving history data accumulated for specific road segments. These scoring methods assume a consistent or synchronous data feed from each vehicle, and do not assume asynchronous methods of data collection.
Conventional UBI approaches risk management as a definitive profile, from the onboard device, that does not change much with environment, or psychographics. The traditional approach has been to depend on demographics. This simplistic approach provides not only a generalized assessment of the associated exposure of the vehicle, plus an unfair bias formed from historic differences by age, sex and race—without regard for dynamic changes in the environment, or behavior of the driver as a disconnected entity from the vehicle. This approach errs on the side of legacy techniques biased by a driver's demographic history rather than present behavior, or geographic region. Further, conventional methods of risk management do not provide consumers choice in privacy settings, temporary or permanent, without reverting to prohibitively expensive risk-transfer methods. Thus, UBI as presently practiced fails to take advantage of the latest advances in onboard safety systems and behaves in a manner similar to conventional risk transfer when it fails to reveal transient changes in driving style. Because it can be shown that in a majority of cases these transients are of a shorter duration than the policy period, they are often minimally, or never, reflected in traditional motor insurance premiums with, or without UBI modifiers applied.